Scenesay Ltd Is a Capital Intensive Firm The Direct Labour Price Variance Was:
A) $40,000 F
B)

question 47

Multiple Choice

Scenesay Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labour hours, are derived from the master budget. $$\begin{array} { | l | l | l | } \hline & \text { Master Budget } & \text { Actual Results } \\\hline \text { Units produced } & 4,000 &3 , 6 2 0 \\\hline \text { Direct Labour Hours } & 10,000 & 11,000 \\\hline \text { Fixed Overhead } & \$ 200,000 & \$ 205,000 \\\hline \text { Variable Overhead } & \$ 320,000 & \$ 355,000 \\\hline \text { Direct Labour } & \$ 200,000 & \$ 180,000 \\\hline\end{array}$$ The direct labour price variance was:

• A) $40,000 F
• B) $18,000 U
• C) $40,000 U
• D) $1,000 F

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Definitions:

Alluvial Fans

Cone-shaped deposits of sediment crossed and built up by streams, typically found at the base of mountain ranges where a river exits a steep valley.

Upper Mississippi

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Earth materials, such as granite and basalt, that are solid, tough, and resistant to weathering and erosion.

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